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TikTok owner ByteDance in advanced talks to buy custom AI chips
Oct 16, 2026
đź“Ť Phliadelphia,PA, USA
# ByteDance in Advanced Talks to Buy Custom AI Chips From MediaTek for Data Centers
ByteDance, the Chinese technology company that owns TikTok, is in advanced discussions to purchase custom artificial intelligence chips from Taiwan-based MediaTek for use in its data centers. The potential agreement would strengthen ByteDance’s computing capabilities as it expands its AI operations and seeks alternatives to advanced chips affected by U.S. export restrictions.
Under the proposed deal, MediaTek would supply an undetermined volume of application-specific integrated circuits, commonly known as ASICs. These chips are designed for particular computing workloads and can be tailored to meet the requirements of a specific customer’s infrastructure.
The agreement would make ByteDance MediaTek’s second major customer for custom ASICs, according to a Bloomberg report. It would also support MediaTek’s strategy to expand beyond its traditional mobile-chip business and compete more directly with established semiconductor companies such as Qualcomm.
MediaTek expects revenue from AI chips to reach approximately $2 billion this year. The company is also targeting a 15% share of an estimated $80 billion market next year, reflecting its ambitions to capture a larger portion of the rapidly expanding AI infrastructure sector.
The talks come as Chinese technology companies look for ways to secure sufficient computing capacity amid U.S. restrictions on exports of advanced artificial intelligence semiconductors. Nvidia’s most powerful chips face limitations under these controls, while domestic suppliers, including Huawei, have struggled to meet the full scale of demand.
Custom-designed accelerators may offer companies greater flexibility in developing their AI infrastructure. However, such chips are not automatically exempt from U.S. export restrictions. The rules can apply to advanced semiconductors according to technical specifications and intended end use, meaning any proposed supply arrangement must comply with the relevant controls.
ByteDance has also explored other options for custom silicon. According to people familiar with the matter cited in reports, the company has held separate discussions with Qualcomm about custom chip-design services. ByteDance also reportedly reached an AI-chip supply agreement with Qualcomm earlier this year, indicating that it is pursuing multiple avenues to strengthen its computing resources.
The potential MediaTek agreement comes as ByteDance considers a substantial increase in capital expenditure to support its artificial intelligence ambitions. Bloomberg reported that the company’s spending could reach as much as $70 billion this year, more than twice its expenditure in the previous year.
If economic and business conditions remain favorable, ByteDance’s capital expenditure could rise to $100 billion in 2027. The company secured a $30 billion loan in September to help finance its planned spending, underscoring the scale of investment required to expand computing infrastructure and develop AI-related services.
MediaTek is also strengthening its position in the AI semiconductor market through its relationship with Nvidia. Last month, Nvidia announced a $3.5 billion investment in MediaTek, widening its financial ties with the Taiwanese chipmaker as competition for AI infrastructure intensifies.
The investment forms part of MediaTek’s record $3.9 billion overseas convertible bond offering. The partnership also expands opportunities for customers seeking to develop custom AI chips that can work with Nvidia’s broader computing platforms.
Under the arrangement, MediaTek will allow customers to use Nvidia technology to design their own AI chips that connect directly to Nvidia’s data center systems. The technology, known as NVLink Fusion, provides components and interconnection capabilities that help custom processors integrate with Nvidia’s larger computing infrastructure.
By using these established connections and specialized memory technologies, chip designers can reduce engineering time and costs. Instead of developing an entirely new way to connect their processors to Nvidia’s systems, companies can concentrate on designing chips suited to their own AI workloads.
The possible ByteDance-MediaTek agreement highlights the growing importance of custom silicon as technology companies compete to secure computing power for increasingly demanding AI applications. For MediaTek, the deal could strengthen its position in a market traditionally dominated by major semiconductor suppliers, while ByteDance would gain another potential source of specialized processors as it expands its data center capacity.
ByteDance, the Chinese technology company that owns TikTok, is in advanced discussions to purchase custom artificial intelligence chips from Taiwan-based MediaTek for use in its data centers. The potential agreement would strengthen ByteDance’s computing capabilities as it expands its AI operations and seeks alternatives to advanced chips affected by U.S. export restrictions.
Under the proposed deal, MediaTek would supply an undetermined volume of application-specific integrated circuits, commonly known as ASICs. These chips are designed for particular computing workloads and can be tailored to meet the requirements of a specific customer’s infrastructure.
The agreement would make ByteDance MediaTek’s second major customer for custom ASICs, according to a Bloomberg report. It would also support MediaTek’s strategy to expand beyond its traditional mobile-chip business and compete more directly with established semiconductor companies such as Qualcomm.
MediaTek expects revenue from AI chips to reach approximately $2 billion this year. The company is also targeting a 15% share of an estimated $80 billion market next year, reflecting its ambitions to capture a larger portion of the rapidly expanding AI infrastructure sector.
The talks come as Chinese technology companies look for ways to secure sufficient computing capacity amid U.S. restrictions on exports of advanced artificial intelligence semiconductors. Nvidia’s most powerful chips face limitations under these controls, while domestic suppliers, including Huawei, have struggled to meet the full scale of demand.
Custom-designed accelerators may offer companies greater flexibility in developing their AI infrastructure. However, such chips are not automatically exempt from U.S. export restrictions. The rules can apply to advanced semiconductors according to technical specifications and intended end use, meaning any proposed supply arrangement must comply with the relevant controls.
ByteDance has also explored other options for custom silicon. According to people familiar with the matter cited in reports, the company has held separate discussions with Qualcomm about custom chip-design services. ByteDance also reportedly reached an AI-chip supply agreement with Qualcomm earlier this year, indicating that it is pursuing multiple avenues to strengthen its computing resources.
The potential MediaTek agreement comes as ByteDance considers a substantial increase in capital expenditure to support its artificial intelligence ambitions. Bloomberg reported that the company’s spending could reach as much as $70 billion this year, more than twice its expenditure in the previous year.
If economic and business conditions remain favorable, ByteDance’s capital expenditure could rise to $100 billion in 2027. The company secured a $30 billion loan in September to help finance its planned spending, underscoring the scale of investment required to expand computing infrastructure and develop AI-related services.
MediaTek is also strengthening its position in the AI semiconductor market through its relationship with Nvidia. Last month, Nvidia announced a $3.5 billion investment in MediaTek, widening its financial ties with the Taiwanese chipmaker as competition for AI infrastructure intensifies.
The investment forms part of MediaTek’s record $3.9 billion overseas convertible bond offering. The partnership also expands opportunities for customers seeking to develop custom AI chips that can work with Nvidia’s broader computing platforms.
Under the arrangement, MediaTek will allow customers to use Nvidia technology to design their own AI chips that connect directly to Nvidia’s data center systems. The technology, known as NVLink Fusion, provides components and interconnection capabilities that help custom processors integrate with Nvidia’s larger computing infrastructure.
By using these established connections and specialized memory technologies, chip designers can reduce engineering time and costs. Instead of developing an entirely new way to connect their processors to Nvidia’s systems, companies can concentrate on designing chips suited to their own AI workloads.
The possible ByteDance-MediaTek agreement highlights the growing importance of custom silicon as technology companies compete to secure computing power for increasingly demanding AI applications. For MediaTek, the deal could strengthen its position in a market traditionally dominated by major semiconductor suppliers, while ByteDance would gain another potential source of specialized processors as it expands its data center capacity.
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